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New TV channels face uphill battle

2010/12/31 | 327 views | Permalink | Source

By Kim Tong-hyung

The country just took a significant step toward unplugging the Big Media by gift-wrapping major newspapers an entry into the television business. It bears further watching how the new cable television stations will compete in what is already a cut-throat broadcasting scene, although it's assured that Darwinism will be ruthlessly in action in the media market in 2011.

The Chosun Ilbo, JoongAng Ilbo and Dong-A Ilbo, the country's three biggest dailies, and Maeil Economic Daily, the leading business newspaper, landed the licenses for "comprehensive programming" channels, which will produce and broadcast original news content as well as entertainment, sports and documentary programs.

Yonhap News, the state-run wire agency, edged four other rivals for the rights to operate a news-only channel to complement YTN. Maeil Economic Daily will retire MBN, its existing cable news channel, as regulators won't permit the newspaper to hold both comprehensive and news-only channels.

It is expected that the new channels will see its debut sometime during the latter half of this year.

The ongoing media consolidation is at the core of an ambitious attempt by the Lee Myung-bak government to deregulate the media marketplace, which started last year by removing the country's traditional cross-ownership bar that prevented one corporation from owning newspapers and television stations at the same time.

The debate among media industry observers is whether the market has room for five more television stations. Aside of the three major terrestrial networks KBS, MBC and SBS, there are currently around 190 pay-television outlets close to sucking dry an annual 3 trillion won (about $2.7 million) advertisement market.

The sense of urgency is even more evident among smaller newspapers that had no prayer of participating in the media grab, as advertisers are likely to reduce their spending on dead-tree outlets first to enlarge their budgets for broadcasters.

The rise of Web-based media outlets and the explosion in the sales of portable Internet devices like smartphones and touch-screen computers, commonly called tablets, is also expected to cut into the advertisement revenue of newspapers.

The Korea Advertisement Association (KAA) said that nearly 52 percent of its member companies said they plan to spend less on newspapers this year in a recent poll.

A recent study by Soongsil University media professor Kim Min-ki estimated that the combined advertisement revenue of newspapers will drop by around 2 percent to 1.57 trillion won this year, from the estimated 1.6 trillion won for 2010. Kim expected that the aggression of the new cable channels in their sales operations will intensify the battles in the broadcasting market and leave it "stinking of blood".

The outlook is even gloomier when heard from industry people.

"Considering the current economic environment, advertisers aren't likely to increase their spending next year, so the size of the pot is basically staying the same. The debut of the five new channels could mean that their spending on newspapers could be reduced by around 10 to 20 percent, and much of the advertising could flock to the newspapers that landed the television licenses", said an employee from the advertising department of one of the newspapers that failed to win a license for a news-only channel.

Nobody wins?

The Korea Communication Commission (KCC) is scrambling to jolt the advertising market, and its discussions include lifting the restrictions that prevented hospitals and makers of prescription drugs ― including sleeping pills, contraceptives and impotence drugs ― from advertising in print outlets and on television. This could mean that the likes of Viagra and Cialis will be depended on to inject new life into the media market as they do in bed.

Another possible move is lifting the ban on in-program advertisements for national television, which happens to be one of the few things viewers would say that the old military dictators got right.

But critics are skeptical on whether the additional influx of advertisers will be enough to carry a new wave of television channels, and the KCC's plans to enable multicasting, or multimode services (MMS) as it prefers to call it, further complicates the picture.

Multicasting refers to the use of digital compression technology to broadcast several television channels in the bandwidth space of a current analog broadcasting signal. This is becoming an intriguing possibility for terrestrial broadcasters ahead of the government-mandated switch to all-digital broadcasting by 2012.

KBS currently has two terrestrial channels, KBS 1 and 2, and through multicasting, it hopes to expand this lineup to five or seven channels. Add this to the prospect of MBC having an extra MBC 2, 3, and 4, and it looks increasingly likely that the new cable television channels may represent birth astride a grave.

According to industry experts, multicasting could increase the number of the country's terrestrial channels up to 18.
"The three terrestrial networks are accounting for more than 80 percent of the total broadcasting revenue and allowing them to operate more channels is basically equivalent to telling smaller broadcasters to get out of the business", the Chosun Ilbo fumed in a recent editorial.
_________________
Korea Communications Commission (KCC) Chairman Choi See-joong answers questions from journalists at the agency's headquarters in Seoul Friday after announcing the winners of licenses for new cable television channels that are to debut in the latter half of the year. / Korea Times

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